Minority Interest Discount Database
The Internal Revenue Service frequently challenges the appraisal of family limited partnerships. Now you can have data to support your appraisal that is based on trades of publicly held limited partnership interests.
Recent Tax Court decisions indicate that judges are carefully examining not only the amount of discount taken but also how it was derived. Revenue Ruling 59-60 states that the sale transactions for publicly held interests should be considered when valuing privately held interests. This is noted as follows:
As a generalization, the prices of stocks which are traded in volume in a free and active market by informed persons best reflect the consensus of the investing public as to what the future holds for the corporations and industries . . .
The Partnership Profiles' Minority Interest Discount Database provides sale transactions and historical financial information for over 400 publicly held entities going back to 1994. The database can be used to identify detailed real estate limited partnership and REIT data that are comparable to your privately held FLP interest. The market price and net asset value of the publicly held partnerships can then be used to quantify the discount for lack of control (or Price to NAV ratios) of the comparable publicly held interests. For more step by step guidance on applying this information to a valuation, please consider using the Comprehensive Guide for the Valuation of Family Limited Partnerships.
A sample of the underlying data that is available for each partnership is shown below:
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